# Chapter 19, Part II. Indicators’ Application for Estimating of Trending Market. Page 4

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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1. ### Sive Morten Special Consultant to the FPA

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The same is true for uptrend:

Chart #4 | EUR/USD 5-min chart and 20-period Bollinger Bands

Pipruit: Sounds logical. Other words you mean that although the market has a low probability to stay here – it still stays because some power forces it. And this power is the power of sellers, right?

Commander in Pips:
That’s correct. It’s like a spring. When you press it, it comes in unnatural condition and holds there while you force on it. As soon as you release it – it returns back in calm condition. So, calm condition of the market is when market is ranging and holds between green bands (1 std. deviation). When some power appears – the market shifts into an unnatural condition – between the red and green bands. Although probability tells us that the market has only a 14% chance to stay here – it still stays, since the power of sellers forces it to do it. And that’s our signal.

Pipruit: Cool!

Commander in Pips: The same is with uptrend:

Chart #5 | EUR/USD 5-min chart and 20-period Bollinger Bands

Pipruit: And what is our signal to enter?

Commander in Pips: Well, I do not to tell definitely about the “signal”, since this hardly could be used as separate trading tool. But as a necessary condition, the market should show some regular closes between the red and green lines. This will tell us that those closes were not just an occasion.

Pipruit: Well, although it sounds logical and has a solid math foundation, I guess in practice it will be hard work to do. Even looking on charts #4 and #5 we see many situations that could lead us to loss, even when the market shows 2-3 closes in the Buy or Sell zones…

Commander in Pips: Right, but as you’re already know, any strategy is a question of probability. What does it mean? Will profit from successful trades beat loss from fake and unsuccessful trades or not? If they will, then this strategy is relatively acceptable. That’s why you should try it on a demo account first to make a final judgment about testing it with real money or not. Still, if you like so much different indicators for trend estimation, I will give you another way that is not spread wide. It based on a combination of short-period DMA and the MACD indicator.